The Echo-nomist

IPL has been going on in full swing, with all the players in a bio-bubble. And it was all very good until someone in the bubble tested positive. Yesterday, KKR revealed that two of their players- Sandeep Warrier and Varun Chakravarthy- tested positive for COVID. They were supposed to play against RCB, but for obvious reasons the match has been postponed. Delhi Capitals was the last team to play against KKR, on Thursday. The players are now isolating in Ahmedabad. After KKR’s news, CSK reported 3 cases. They weren’t the players but the bus cleaner, chief executive Kasi Viswanathan and bowling coach L Balaji. MI is scheduled to play against SRH on Tuesday, but none of them have gone for training as there are suspected COVID cases among the ground staff.

It seems that the virus has snuck into the bubble. This has cast a lot of uncertainty on IPL and the players. Will they freeze IPL or will it continue or get cancelled? There is a lot of pressure on BCCI to take this decision. People are arguing that it should be cancelled due to safety reasons, which makes sense because player’s health is of utmost importance. Others are saying that it should continue as it provides much needed entertainment and distraction, in such grim times. IF it really does get cancelled, it will affect much more than people’s entertainment. It will affect the economy.

Yes, that’s right.

IPL contributed 11.5 billion to India’s GDP in 2015. Imagine how much this number has gone up in 6 years! And not just India… Last year, the IPL happened in UAE and it added around $24.5 million to their economy! IPL has more than one source of revenue, how else would they earn so much money?

• Merchandise: Cricket, especially IPL, has some die hard fans. That too from every age group. Which calls for more ways to earn money. Think- how can they earn money from them? By selling t-shirts, flags and official jerseys, singed t shirts, cricket bats or anything that represents the team. People will buy it all. And with 8 teams, there’s a lot of potential to earn money.

• Viewership for sports broadcasters: IPL has the most number of television viewers as compared to any other sports league in India. This means a lot of of people watching, whom they can make an impression on. More viewers to target via advertisements and generate lots of revenue.

• Sponsorship and Ads: We’ve written about IPL’s revenue through ads and sponsors and just how premium it is. But to give a brief, Vivo, the title sponsor for this year, has paid ₹2,199 crore to keep that title sponsorship for 5 years, including 2021. Broadcasters have to pay for the tv rights. Whoever has the most money to offer, gets it. Sony is paying ₹3269.5 crore for it! Every single IPL ad costs more than you can think. They’re making big money.

Usually, sale of tickets also contributes significantly to their revenue but because of the virus, it has barely been a revenue generator (no in-person attendance was allowed at matches this year). The hospitality sectors benefit as they look for hotels for teams to stay at, in each city they’re scheduled to play matches in.

Did you know that BCCI didn’t have to pay tax earlier? They were considered a “charitable organisation.” Back then cricket was about sports and fitness. It still is, but it’s also about entertainment, business etc. So after IPL started, the government, shocked at its success, decided they too wanted a share of that money. In 2012, the government snatched that status and declared them a taxable organisation. And because it earn sooo much money, they’re also heavily taxable.

BCCI wasn’t too keen on this but they didn’t really have much of a choice. In September 2019, they paid a little over ₹ 460 crore to settle tax dues. They’re becoming more and more popular now, which means they owe around ₹1300 crore to the govt. The taxes have amounted to an average of ₹350 crore per year.

Clearly, they have a huge impact on the economy in terms of money and taxes. But that’s not it. They also generate employment opportunities. Every year, they need medical experts for every team, cheer leaders, coaches, stadium employees, security staff, etc. It leads to a rise in sports tourism, as fans and players from all around the world come to watch. They increase the attention tier-2 cities get. Since matches are played all across India, media also brings the tier 2 cities forward, which is beneficial for their development.

IPL aids in one more thing, finding talent for the International Indian cricket team. It gives recognition to players and gives newer players a chance to showcase their talent and get recognised.

So IPL 2021- to be or not to be? That’s a decision in the hands of BBCI. But cancelling it will have a negative impact on an economy that isn’t doing too well as it is. Freezing it for the time being can be a win-win situation.

UPDATE: IPL has been suspended for the time being after Wriddhiman Saha from SRH, and Amit Mishra from DC tested positive today. Their statement says “The Indian Premier League Governing Council (IPL GC) and Board of Control for Cricket in India (BCCI) in an emergency meeting has unanimously decided to postpone IPL 2021 season, with immediate effect.”